Tough budget but let’s support it

For the first time, Uganda will fund over 80% of her 2013/14 Ushs13trillion budget using domestic resources, mainly taxes and internal borrowing.While its good news Uganda is weaning off from donor support, it’s also imperative to note that the move to widen the tax base and increase taxes was a forced one after donors pulled off budget support due  to corruption allegations in the Office of the Prime Minster and Public Service.

The fact is you don’t need to be an economist or an expert to know that a Ushs50 addition to the excise duty on fuel, a 10 percent levy on mobile money charges, reinstating the Ushs 200 on Kerosene, removal of VAT exemptions on water, wheat, floor and hotel accommodation will definitely have a negative impact on the social well being of Ugandans.

Yes a number of experts have said the impact on social well being and the economy resulting from a raft of new tax measures will be minimal, but the impact maybe much bigger than they anticipate if tax education is left unattended to given the dubious traders/dealers we have. For example, locals should be explained what a Ushs200 tax on kerosene means to them; what will be the average price a litre with additional Ushs200?

The same should be done to wheat, mobile money, water etc. This will make Ugandans more vigilant about dubious dealers and maintain prices within a reasonable level; otherwise it might be a recipe for inflation.

If Uganda must achieve the projected growth levels of seven per cent (last year the economy registered a 5.1 per cent), then the legal framework through which URA will collaborate with Uganda Registration Services  Bureau, Local governments and KCCA to identify taxpayers and collect taxes on small businesses which are hard to reach by URA must be worked on and implemented as soon as possible. The government must ensure financial discipline and zero tolerance to corruption.

The Ushs2.3 trillion allocation to infrastructure development, up from Ushs1.6 trillion the year before, if implemented will spur growth in the long run as the cost of doing business in terms of transportation will come down.

While some experts feel the timing of the tax measures was not right, and that it is going to be a tough journey for us to raise the money, it’s nothing to cry over spilt milk. Therefore, Ugandans should support the budget by paying the taxes, but most importantly ask for accountability of their monies and report corrupt officials.